Hypermarcas Leads Consumer Gain After Slower Brazilian Inflation

Hypermarcas SA (HYPE3) rose to a two-month
high, leading gains among Brazilian consumer stocks after
slower-than-projected inflation fueled speculation that policy
makers will maintain borrowing costs at record lows.

The maker of more than 190 products ranging from
pharmaceuticals to diapers jumped 3.6 percent to 16.84 reais at
2:04 p.m. in Sao Paulo, the highest since Oct. 24. It was the
steepest advance on the benchmark Bovespa index, which slid 0.5
percent.

The IGP-M index of Brazilian wholesale, construction and
consumer prices climbed 0.68 percent in December, the Getulio
Vargas Foundation said on its website today. The median forecast
of 30 analysts surveyed by Bloomberg was for a 0.76 percent
increase. Prices rose 7.82 percent from a year earlier.

“The central bank may not resume cutting the benchmark
rate, but it will probably take longer to raise it,” Vladimir Caramaschi, the chief strategist at Credit Agricole Brasil SA,
said in a phone interview from Sao Paulo.

Policy makers led by central bank President Alexandre Tombini have reduced the benchmark Selic rate by 5.25 percentage
points to a record low 7.25 percent since August 2011 and cut
bank reserve requirements to boost credit and shore up economic
growth. Brazilian swap rates on contracts due in January 2015
fell three basis points, or 0.03 percentage point, to 7.75
percent today.